Let's Do The Math -- Back Of The Envelope At The Thirsty Lion Earlier Today -- February 26, 2023

EOG:

• production forecast for 2023: 944,000 to 1.03 million bopd; let's call it 1 million bopd
• most recent production: 909,100 boepd
• difference: 90,000 boepd
• EOG: to increase CAPEX by $1.4 billion, y/y, in 2023
• $1.4 billion / 90,000 boepd = $16,000 / bbl
• I was once told a common data point when valuing an oil play: $20,000 - $40,000 / flowing boepd
• what would it take to "cover" that $1.4 billion in one year?
• $1.4 billion / (90,000 bopd x 365 days) =
• $1.4 billion / (32,850,000) = $42

Now, is that $42 even in the ballpark?

Devon says it will maintain its proposed drilling program for 2023 down to $40 / bbl. Link here.

Let's take a look at the rest of that NGI story.

By the way, before we get started, remember all the news stories less than three months ago that shale operators were going to stay the course, not increase CAPEX in 2023 -- what happened? But I digress.

Devon.

• plays in play:
• Permian Delaware
• Anadarko
• Williston,
• Powder River

• 2023 CAPEX budget: $3.6 - $3.8 billion
• midpoint: a 46% increase from 2022's CAPEX of $2.54 billion\
• holy mackerel! A 46% increase!
• will self-fund the entire budget even if WTI drops as low as $40 / bbl
  

• Delaware:
• will be the top funded asset in the Devon portfolio
• roughly 60% of Devon's total capital budget for 2023
• Devon's Delaware: "world-class productivity"
• Devon has established multiple "outlets" which will avoid many of the takeaway constraints in the basin
• 95% of Devon's Delaware gas protected by firm contracts
• 2/3rds of Devon's Delaware program will be directed in New Mexico
  

• Eagle Ford:
• three-rig program for 2023
• bring online nearly 90 wells across 82,000 net-acre position

• Anadarko:
• 40 wells across 300,000 net acres

• Powder River Basin:
• 20 wells across 300,000 net acres

• Williston:
• 40 gross wells across 123,000 net acres

• Production, 2022:
• 4Q22: 1.03 Bcf/d natural gas vs 943 in 2021;
• a quarterly record 316,000 bopd vs 300,000 in 2021;
• quarterly record 148,000 b/d natural gas liquids vs 154,000 in 2021

• Previously reported:
• acquired Eagle Ford pure-play Validus Energy for $1.8 billion
• acquired RimRock Oil and Gas LP's Williston assets for $865 million
  

Much more at the link.

• Devon reported net income of $1.2 billion ($1.84/share) for the fourth quarter, versus $1.51 billion ($2.24) in 4Q2021. Full-year net earnings were $6.04 billion, up from $2.83 billion in 2021. 
• Total revenue was $4.3 billion in the fourth quarter, compared with $4.27 billion in the same period of 2021. Full-year revenues were $19.2 billion in 2022, up from $12.2 billion in 2021.